Google, Yahoo Search Ad Hearings Commence with Discord

The Googlehoo hearings have begun on Capitol Hill and, true to the course of events that started with Microsoft's Feb. 1 offer to buy Yahoo for $44.6 billion, the opposing lawyers for Microsoft and Yahoo are in disagreement.

Google and Yahoo struck the deal to thwart Microsoft's acquisition advances toward Yahoo, which are still in the air as we hurtle toward Yahoo's Aug. 1 shareholders' meeting.

Microsoft General Counsel Brad Smith said Yahoo CEO Jerry Yang told Microsoft officials that the Google-Yahoo partnership would eliminate both Yahoo and Microsoft as serious players in the online advertising market. Yahoo General Counsel Michael Callahan said Yang never said that, adding that Yahoo is not exiting search.

What we have here is a failure to communicate. Smith should know full well from previous Microsoft legal issues that muddying up the proceedings with he-said, she-said claims without evidence will test the patience of a Senate committee that is out of its depth on the subject of search, online advertising and high tech.

The parties involved will likely earn sharp rebukes from befuddled senators if some common ground over what transpired during the Google, Microsoft and Yahoo meetings cannot be achieved.

Meanwhile, David Drummond, Google's senior vice president for corporate development and chief legal officer, argued that Google's advertising agreement with Yahoo will maintain and expand competition on the Internet.

This will be good for users and good for innovation while enabling Google and Yahoo to remain "vigorous competitors," Drummond said. Characterizing the dead-man-walking position of Yahoo as vigorous in light of the latest barrages from investor-activist-anarchist Carl Icahn and Microsoft is so far afield as to be a laughable falsity.

But hey, anything to add levity and laughs to a tense hearing.

As TechCrunch noted, the highlight is the pledge that Yahoo will anonymize the IP address of a searcher's computer before passing a search request to Google is a key development.

This should allay privacy advocates' concerns, but it is a small consideration in the eyes of government officials looking at anticompetitive behaviors in the Googlehoo deal.